September 30, 2022

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MainStreet Cuts a Third of Its Employees, Citing Market Conditions

  • B2B finance startup MainStreet has laid off a third of its roughly 150 employees.
  • CEO Doug Ludlow cited “today’s incredibly rough market,” and warned it may get worse.
  • The company grew quickly after raising a significant Series A, but revenue failed to keep pace.

In January 2022, B2B financial-services startup MainStreet flew the entire company out for a week-long working vacation in Maui. 

About 150 employees stayed at the luxurious Grand Wailea Hotel, attended meetings, and enjoyed free buffets at the beachfront Hawaiian resort. Workers who questioned the expense were told the startup was aiming to land a significant Series B funding round that would ensure significant runway.

But the funding that ultimately materialized was smaller than originally planned, Insider has learned, and on Tuesday the company cut around 50 employees — roughly a third of its workforce.

The layoffs highlight the risks of unchecked startup spending as financial markets become increasingly turbulent, and come hot on the heels of similar rounds of employee reductions at Robinhood and Cameo.

In an email to staff, MainStreet CEO Doug Ludlow cited difficult market conditions and a push toward profitability. “We took this action because we believe that there is a very strong chance that today’s incredibly rough market is only going to get worse, and potentially remain so for months, if not years,” he wrote.

“We need to ensure that as a company we are in control of our own destiny, not subject to the whims and waves of the market. This reorg is one of the steps that puts us on a near-term path to profitability and self-sustainability.”

MainStreet was founded in 2019, and grew rapidly on the back of a product that helped startups and other businesses claim tax credits. In March 2021, it raised $60 million in a Series A funding round from investors including SignalFire, Tusk Venture Partners, and Sound Ventures. 

Headcount and costs quickly ballooned, one source said, but revenue growth failed to keep pace. The company set its sights on securing a similarly lofty Series B — an effort known internally as “Baker Street” — but Russia’s invasion of Ukraine and rising uncertainty in the markets proved troublesome. 

The company’s chief marketing officer Stacey Politi shared a copy of Ludlow’s email to staff with Insider, and did not respond to further questions about the business.

The VP of engineering, VP of people, VP of sales, and VP of design have all left the company, one source said, with some taking voluntary severance. Rank-and-file layoffs came from across much of the company, including engineering, sales, and marketing. Let-go employees were given two months’ salary, healthcare support, and were allowed to keep their laptops.

Here’s the full email CEO Doug Ludlow sent employees:

This week, we took the difficult step of reorganizing and restructuring the company, and in doing so have eliminated ~30% of the roles at @MainStreet.

 I know from firsthand experience just how painful it is to lose a job due to a reorg – it can be confusing, disorienting, and scary – so I understand just how difficult this week is for our affected team members.

We did not take this decision lightly, and we are doing everything within our power to provide as much transition assistance (severance, health care, recruiter and job placement assistance) as is possible.

A big part of leadership is looking reality square in the eye, and then making the right call, no matter how difficult it may seem. 

We took this action because we believe that there is a very strong chance that today’s incredibly rough market is only going to get worse, and potentially remain so for months, if not years. 

We need to ensure that as a company we are in control of our own destiny, not subject to the whims and waves of the market. This reorg is one of the steps that puts us on a near-term path to profitability and self-sustainability. 

We believe deeply in our mission of helping support founders and small business owners, and we are committed to doing whatever needs to be done to achieve that mission.

How can you help? Please DM me, and let me know if you’re hiring. I will connect you with our internal recruiting team who is working to help place former MainStreet Team Members with new roles.

Thanks, 

Doug

https://www.businessinsider.com/mainstreet-lays-off-third-of-employees-market-conditions-2022-5